11.15.13 6:25 PM ET

In a country where even a former prime minister has been convicted of tax fraud, it should be little surprise that major corporations think they might be able to pull a fast one.

The Italian subsidiary of multinational tech magnate Apple is under investigation by prosecutors in Italy for allegedly hiding $1.3 billion from the local tax authorities. The alleged fiscal fraud supposedly took place in 2010 and 2011, during the waning years of Silvio Berlusconi’s troubled reign when Italy’s government was on the brink of collapse. At the time, the Italian government was focused on damage control from Berlusconi’s bunga-bunga allegations and critics claim that apparently no one was paying much attention to fiscal matters. Berlusconi himself was on trial for tax evasion at the time, for which he was eventually convicted earlier this year.

Apple’s alleged evasion ended, Milan prosecutors say, when Mario Monti was appointed as a technocratic leader. Prior to 2010, when Apple allegedly hid $277 million from the tax authorities, and after 2011, when they are accused of hiding $1.1 billion in income, Apple’s books were apparently tidy, according to public audit reports for 2007, 2008, and 2009. ““The Italian tax authorities already audited Apple Italy in 2007, 2008 and 2009 and confirmed that we were in full compliance with the OECD documentation and transparency requirements. We are confident the current review will reach the same conclusion,” Apple said in a statement.

According to investigators in Milan, Apple allegedly funneled Italian-based profits through a company called Apple Sales International (ASI) in Ireland, significantly lowering its taxable income in Italy while taking advantage of a tax loophole in Ireland. The practice caught the eye of the U.S. Senate last May, with some Senators describing it as a form of legal tax avoidance in the U.S. made possible by the U.S. tax code, but with Cook testifying that the Irish subsidiaries do not effectively reduce the company’s taxes. Apple also denies any impropriety in Italy. “Apple pays every dollar and euro it owes in taxes and we are continuously audited by governments around the world,” the company said in a statement issued from their Milan office.

The investigation into Apple underscores a new focus by the cash-strapped Italian government, which is training its sights on foreign companies doing business in Italy. For years, allegations that Italy is a de facto tax haven for foreign companies have inspired many Italian companies to base their operations abroad, only to continue business as usual in Italy. Fashion gurus Domenico Dolce and Stefano Gabbana were convicted of tax fraud earlier this year and each sentenced to 20 months in prison. Their sentences are suspended while they appeal the conviction. An unnamed source told Reuters that Italy is becoming one of the most aggressive tax authorities in Europe in an attempt to recoup lost revenue from years of tax evasion. “In general, the focus is shifting towards multi-nationals that are able to lower their tax base through their international operations,” the source told Reuters.

The investigation into Apple’s alleged fraud is likely to take several months and will require extensive cooperation from the Irish authorities, who may or may not cooperate. On Tuesday, representatives from Italy’s tax police and former finance minister under Monti’s government, Paola Severino, met in a closed-door meeting with Apple’s Italian legal team in Milan, apparently to lay out the evidence against the company, according to news reports.

According to an investigative piece in Italy’s L’Espresso magazine, similar practices by eBay and Google in Italy, according to the magazine, inspired Italy’s center-left government to propose a so-called “Google Tax” to require foreign companies that advertise and sell products in Italy to do so only through companies that have not just a physical presence in Italy, but a fiscal presence as well.